How to use the credit card payoff calculator
The calculator has three tools, one for each question people usually ask about card debt.
- Fixed payment shows how long a set monthly payment takes to clear the balance, and the interest you pay along the way.
- Minimum payments only shows what happens if you pay just what the statement asks for, and compares it with freezing the payment at today’s minimum.
- Payoff by a date works backwards from a deadline to the payment you need.
- Card balance. Use the current balance from your statement or app.
- APR. Your statement lists the purchase APR. If part of the balance is a promotional or cash-advance balance with a different rate, the result is only an approximation.
- Payment, minimum formula or deadline, depending on the tool. For the minimum, check your cardholder agreement. Interest plus 1% of the balance with a $25 floor is a common formula.
- New charges each month, if you are still using the card. Enter 0 if you have stopped.
Each tool draws the balance month by month until it reaches zero and lists the interest year by year.
How the payoff is calculated
Each month the calculator charges interest on the balance, subtracts your payment and adds any new charges:
New balance = Balance + Interest − Payment + New charges
Minimum payment = max(Floor, Interest + p × Balance)p is the percentage of the balance in the minimum (1% by default). If your card includes the interest in the percentage, the minimum is max(Floor, p × (Balance + Interest)). The process repeats until the balance reaches zero.
For a deadline of n months, the payment is the level amount that repays the balance with interest, the same formula as a loan payment:
Card issuers actually charge interest on the average daily balance, at the APR divided by 365, and billing cycles vary in length. Charging APR ÷ 12 on the balance once a month is a standard simplification, and the difference is usually small.
A worked example
You owe $6,000 at 22.9% and pay $250 a month without adding new charges.
The first month’s interest is $114.50, so nearly half of the first payment goes to interest. That share grows every month as the balance falls.
The card is clear in 2 years 9 months, in Jul 2029. You pay $8,100.76 in total, of which $2,100.76 is interest. Adding $50 to every payment would save $470.90 and finish 7 months sooner.
The real cost of minimum payments
The same $6,000 balance, paid only at the minimum of interest plus 1% of the balance, starts with a payment of $174.50. It then takes 20 years 10 months to clear and costs $10,361.86 in interest, more than the original balance.
The trap is that the minimum shrinks with the balance. Each month you pay a little less, so the principal falls more slowly, so the next minimum is smaller again. By the final years you are paying the $25 floor on a small balance that barely moves.
Keeping the payment at the first minimum of $174.50 until the card is clear changes everything. The card is paid off in 4 years 9 months and the interest falls to $3,855.33, a saving of $6,506.54. You pay nothing more per month than the card asked for at the start. You simply stop paying less.
| Minimum payment rule | Time to pay off | Total interest |
|---|---|---|
| Interest + 1% of the balance | 20 years 10 months | $10,361.86 |
| Interest + 2% of the balance | 12 years 3 months | $5,361.04 |
| 3% of the balance, interest included | 18 years 9 months | $9,084.26 |
| Fixed at the first 1% minimum | 4 years 9 months | $3,855.33 |
In the US, statements must show how long the balance would take to repay at the minimum, and the payment that would clear it in three years. That box is worth reading.
Payment size matters more than anything else
At a card APR, interest piles up quickly, so the size of the payment changes the result far more than it seems it should:
| Monthly payment | Time to pay off | Total interest |
|---|---|---|
| $200 | 3 years 9 months | $2,991.01 |
| $250 | 2 years 9 months | $2,100.76 |
| $400 | 1 year 6 months | $1,136.16 |
| $500 | 1 year 2 months | $879.66 |
Doubling the payment from $250 to $500 cuts the interest by more than half. To set a deadline instead, the Payoff by a date tool shows that clearing $6,000 in 12 months takes $564.17 a month, and in 36 months $231.95.
If the payment is not much more than the first month’s interest, the balance hardly moves. The calculator flags a payment that does not cover the interest at all, because the debt would then grow forever.
What this calculator does not include
- Daily interest and billing cycles. Real statements use the average daily balance and cycles of 28 to 31 days, so the figures can differ by a small amount.
- Several rates on one card. Promotional, balance-transfer and cash-advance balances often carry different APRs. Payments above the minimum generally go to the highest-rate balance first.
- Fees and rate changes. Late fees, annual fees and penalty APRs are not modeled, and variable APRs move with the prime rate.
- Several cards at once. To plan payoffs across several debts, use the debt payoff calculator, which compares the snowball and avalanche methods.